The Memphis appeal. [volume] (Memphis, Tenn.) 1886-1890, 1887-04-07
THE NEW WATER BONDS
LOCAL FINANCIERS CONSIDER
THEN GILT EDGE SECURITY.
The Bill aud n Circular Letter
Mailed to the Various Moneyed
Institutions.

Inc clerical force employed at the
Taxing District office has been busy
during the past day or two mailing
copies Of the water bill passed by the
last Legislature to mere hants, bankers,
insurance men and security brokers
generally in The city. A number Of
copies have also been mailed to CAPT
talists abroad, as we'll as TO local finan-
cieTs absent from the city. Accomps-
nying the bill is a circular letter, as
follows:
Memphis, TEHS. April 4, 1887.
DEAR SRI send you herewith q
copy Of the act Of the Legislature su.
thorizing the city to issue 81, 200, 900
Of bonds for the purpose OF building
and owning water works. These bonds
and the interest thereon are secured
by mortgage upon the water plant
and the franchise to operate the same.
You are requested to read this bill
bill over carefully, and are invited to
make such subscription for the said
bonds as your judgment prompts. The
form Of the bond is in the act, section
2. Yours truly,
DAVIDP. MADDEN, President.
These were delivered in the city
yesterday, and while majority OF
them received a careful perusal, others
found their way into the waste basket
Upon learning this latter disposition
of the bill and letter, request for
reply was stamped on the letter. A
reporter caught several of the gsntle-
men who had received them in the
act of glancing over the contents.
Others had laid them aside for scru-
tiny after the rush and cares Of bust
ness. Among the former was Mr..
Edward Goldsmith, cashier of the
German Bank, who gave his conclu-
eions 10 substance as follows:
"The only security OF the bond.
holder is lien on the works, but this
will be sufficient if ii can be main
tanned. Water works in large cities
are generally good paying institutions,
and their stock is considered gilt edge
for investment. With a guarantee
that the lien will be enforced, and the
levy OF 80 cents on the 500 for inter-
est during 1887 and 1888 collected and
properly appropriated, there is little
doubt that the entire amount will be
readily taken. Under these safeguards
/ would not be afraid to invest"
AS close and careful financier,
there is perhaps no superior to Mr.
Goldsmith in the South. He has the
unrestricted confidence OF the German
Bank directors, as we'll a those OF all
the other similar institutions in the
city. His views were fully concurred
in by Mr.. 1. N. Snowden, of Fried.
man Bros, who said:
"If the local banks and cspitslists
will take $250,0O0 or $500, 900 of the
bonds, in my opinion there will be no
trouble in floating the remainder as
needed. There is very little, if any,
risk in them, so far as 1 can see. That
would be the same policy pursued in
funding the old city debt. When the
foreign holders saw that the compro-
mise bonds issued carried with them
the practically demonstrated conf.
dence of local holders nearly every
one OF them came forward and &C.
cepted them. A levy of 80 cents on
tbs 500 ct taxable property in the
district has already been made for the
next two years to pay the interest, and
that will laise considerable amount
Of money. Mr.. Hadden will hardly
receive the replies expected, but will
probably have to call upon the gentle
men in'person."
Mr.. M. II. Kstzsnberger does not
think he security offered is sufficient
for a careful financieF 10 accept, and
further, that there is no margin for
profit, something investors have
right to expect. Possibly some man
or company, with view to finally
gain and operate the works, might b.
found to take them, but no one else.
The clause making the works alone,
and not the city, liable for any default
in interest was the greatest drawback.
He illustrated his view of the worth.
lessnees of tbs bonds by referring TO
the fact that when the bill was first
introduced, and capitalists tn Jught
the city made liable, local securities
tumbled frighiully. When the true
Of the act became known,
however, the lost valuation was zap
idly regained,
President Hadden was afterwards
seen, but preferred silence on the sub.
jeCt until replies had been received
from parties TO whom the bill and let
ter had been sent.